Steering for Health

Joan Costa-Font & Tony Hockley, London School of Economics & Political Science (LSE), Caroline Rudisill, Arnold School of Public Health, University of South Carolina

Our new textbook “Behavioural Incentive Design for Health Policy” has been in development a long time, mostly during the COVID-19 pandemic period. Much more important than a convivial three years of co-operation as authors has been the several decades long incremental shift in health analysis and policy discussions and practice.  Historic debates about economic incentives in health and health care, particularly user “co-payments” and  “deductibles” paid by patients, “fee-for-service” reimbursement in health systems and “sin taxes” faced by consumers have been enhanced with important nuance due to evidence from behavioural sciences. It is now exactly sixty years since Kenneth Arrow wrote about the “uncertainty and the welfare economics of medical care”, in which he subtlety emphasised the limitations of the traditional economic approach to incentives in health. It is also fifty years since Tversky and Kahneman highlighted evidence showing clinical judgments to be biased by the availability heuristic (where people’s decisions are driven by what immediately comes to mind). Over decades, the analysis of “behavioural” incentives for health has grown in both quantity and quality, informed by evidence from controlled trials of specific policies and by data from natural experiments in the field. It seems timely to reflect on these exciting developments and to bring them together as a coherent science of behavioural incentive design for health. 

It has been challenging to do justice to the wealth of insight now available for inclusion in a book of over 200 pages, particularly as it seemed important to choose and explain practical cases that illustrate core themes. Our aim has been to help readers develop an understanding of options to incentivise health-related behaviours in real-world contexts. The core concern driving the entire book is answering the question as to whether we can steer people to be healthy.  To enable this goal, we discuss what incentives and policies are likely to work, while also being ethical and likely to be acceptable to those targeted. We argue that the “choice architecture” for health decisions ought to be a central consideration for all health policy design, because incentives and behavioural decisions do not exist within a pristine vacuum, but within a very human context in which perceptions, norms, and identities that all matter. However, there is more than just the nudge agenda in the book. We bring together the broader health economics literature and contributions in behavioural and social science from a vast number of disciplines.  We also incorporate evidence and case examples from European countries, the United States and developing countries to reflect the global body of knowledge focusing on these issues. While health systems and populations have their distinct country and region-based challenges, cross-national insights can be informative for policy design across borders.

There are so many questions about incentives for health to which traditional approaches have failed to provide effective or complete answers: 

How can pro-social behaviours in the health domain be encouraged? Can we design interventions to address health inequalities and achieve mutually beneficial outcomes? Why is the common belief that “an ounce of prevention is worth a pound of cure” not borne out in practice?  How can the longstanding failures to act on preventative health be overcome? Why is the uptake of evidence-based changes in clinical practice so slow and patient compliance with treatment, screening and prevention advice so weak? If health is so important, and health insurance so expensive, why are users prone to make poor insurance choices? Why do people fail to prepare themselves for healthy ageing? Why do they fail to purchase insurance that protects them against the costs of funding long term care? There are so many questions that still trouble health policy design after decades of analysis.

Writing this book during a pandemic has offered plenty of examples to highlight the importance of answering these questions. The Covid-19 pandemic put many of these questions at the top of the policy agenda. The virus exploited historic weaknesses in population health and in health systems with tragic and lasting consequences. Given the timing of our writing the book, we have drawn on these pandemic experiences to reflect on potential lessons for health policy. The evidence emerging from novel policies used during the pandemic will continue to inform and update our understanding of health incentives. Motivations to support our neighbours, to be vaccinated, or to be tested and to socially distance ourselves when infected have all had new light cast upon them. Lotteries and direct financial incentives have been used, and injunctive and descriptive social norms have been common in health campaigns. The imperative to learn from these tactics within an unexpected health emergency is one that we could not ignore even without the benefit of hindsight and the more detailed analysis that a few more years of consideration will provide. Our aim, anyway, has been to guide the reader towards behavioural ways of thinking about health incentives, not to pretend to offer a “silver bullet” for every (or any) specific context.

Covid self testing (Photo by Mika Baumeister on Unsplash)

We conclude with an overview of the “behavioural revolution” that has taken place in public policy around the world, largely due to the unprecedented success of “Nudge”, fortuitously published at a time when economics had self-evidently failed, and when economic incentives became the prime suspect in analysis of the global crash. The revolution, however, is far from over. There is still much to discover, just as there is much detail to which we cannot do justice except to cite the authors of the work upon which we have relied. The literature grows month-by-month, not least in the Behavioural Public Policy journal. Our hope is that “Steering for Health” is a good start for the interested reader, prompting their own inquiry, and a nudge to ensuring that questions of choice architecture become an established feature in the design of incentives for health. It should also be a starting point for us as authors, to be updated and improved as the revolution drives inevitably onward; more steered than steering.     

“Behavioural Incentive Design for Health Policy” was published by Cambridge University Press on 1st June 2023 in hardback, Paperbook, and Kindle.

Members of the International Behavioural Public Policy Association benefit from a 30% discount on this and other selected CUP titles, when purchasing from CUP, in addition to full access to the journal and other benefits

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Steering for Health

Steering for Health

Steering for Health